Tabs

Overview

Summary

Commitment

Sunny Money

Launched

2009

Est. Duration

3 Years

Estimated Total Value

$3,600,000

Region

Africa

Countries

KENYA,
MALAWI,
SENEGAL,
Tanzania,
ZAMBIA

Commitment by

SolarAid

Details

By setting up micro-franchises, SolarAid will provide clean energy solutions to the rural poor in Africa. Each of these microfranchisees will set up a business under the Sunny Money franchise to sell a total of 100,000 solar products to rural consumers. In doing so, SolarAid will convert or replace kerosene lamps with solar lights, the microfranchisees will generate revenue for themselves, while running sustainable enterprises, and consumers will receive energy cost savings by switching to solar.
SolarAid's Product Development:
-SolarAid has developed a multi-purpose solar kit, the Kadzuwa, which can power a light or radio and charge a cell phone.
-Their second product, which will be available in 2010, is an entry-level light specifically designed for transient populations and is an affordable, robust, and reliable lighting solution that would replace the use of kerosene, as it allows conversion of a kerosene lamp into a solar lamp.
-A third product, available by 2010, will have the ability to power five light globes,which could be used in the kitchen, living area, toilet, outside for security, and sleeping area; this solar device will be hardwired into the hut.
-All SolarAid products come with a one-year guarantee, ensuring that SolarAid provides a solar solution rather than a throw-away gadget. To distribute and sell its products, SolarAid has developed a simple yet effective, extensive microfranchise distribution network, which SolarAid will further expand as it continues to scale.
Expanding SolarAid's Microfranchise Distribution Network:
- SolarAid typically begins the process of implementation in a new region by identifying local partners who are familiar with the cultural context and have established relationships with the local constituents. The process of project implementation follows two tracks: the first focuses on demonstrating (to the local community) the benefits of solar power concerning the environment and household spending. The second track seeks to identify potential franchisees, through community nominations and an election process, with SolarAid ultimately selecting the top five applicants out of the pool of elected candidates. The prospective franchisees are then expected to complete a five-day training program and pass an exam to be granted a franchise.
Timeline:
-Year 1: 120 franchisees
-Year 2: 240 franchisees
-Year 3: 360 franchisees
-Year 4: 500 franchisees

Background

African countries are increasingly concerned with meeting the pressing demands for a minimum level of energy services for their poor, while ensuring protection of their environment. Many of the poor have no electricity and continue to rely on inefficient and environmentally risky unprocessed biomass fuels. Furthermore, the decentralised nature of human settlements in Africa means that distribution costs for conventional centralised power systems are high. Extending power from centralised generating stations to individual homes is costly. In this context, renewables such as solar energy are particularly effective for delivering energy to Africa's rural poor in an appropriate manner.
The issue of energy has been ignored by development agencies for too long.
At the heart of this is the problem of kerosene: most households in Africa have a kerosene lamp, which means there are between 100m and 200m kerosene lamps across the continent for a population of just under one billion. The commitment maker's calculations show that the average household uses 3-4 litres of kerosene per month for its kerosene lamp, producing approximately a tonne of CO2 over 7-10 years. Across the continent, that's hundreds of millions of tonnes of CO2. Furthermore, kerosene has serious adverse health effects. Kerosene fumes are responsible for lung disease; poor light from kerosene lamps causes severe eyesight problems; accidentally overturned lamps cause fires and serious burns; and accidental ingestion of kerosene is the main cause of childhood poisoning in Africa. The commitment maker's research also shows that the high cost of kerosene has a severe impact on household finances in Africa. Indeed, the average rural household in Africa spends 10-20% of its income on kerosene for lighting, batteries for radios and charging their mobile phones. For instance, in Kenya:
- Avg. household kerosene consumption = 422 KSH (?3.74) per calendar month
- Avg. household monthly cost of mobile phone charging = 155 KSH (?1.37) per calendar month
- Avg. monthly cost of buying batteries to use for radio playing = 80 KSH (?0.70) per calendar month
This gives a total monthly spend of 657 KSH (?5.81) per calendar month.
That's why Solar Aid set up the Sunny Money microfranchise: to help wipe out kerosene usage in Africa and replace it with clean energy. To do this, SolarAid is focusing on three particularly interlinked problems:
- Clean energy: The objective is to provide affordable, reliable clean energy, particularly for lighting, but also in the longer term for other uses.
- Poverty reduction: The objective is to move entrepreneurs out of the informal economy into the mainstream economy, so that they have reliable income, pay taxes, can support their wider family and support the economic development of the continent.
- Building sustainable businesses for franchisees: The objective is to build businesses for franchisees that will grow sustainably and effectively in the short and long run.

Progress Reports

May 2013
SolarAid, through Sunny Money has become Africa's biggest last mile seller of solar lights. It is on track to grow by 600% year on year in 2012/13, selling over 310,000 lights and rapidly approaching the break-even point. The World Bank's Lighting Africa program estimates that SunnyMoney is selling up to 25% of all the lights being sold in Africa.
The parameters of SolarAid's original commitment changed, as it is no longer focused on simply building a micro-franchise network. The SunnyMoney business model evolved into a sequencing of routes to market at different stages of market penetration, appropriate for different levels of demand:
1. Schools Promotions: When demand and market penetration is very low, SunnyMoney visits groups of headteachers and trains them to promote solar lights to the students' parents. We then deliver lights to groups of headteachers who take them back to their communities.
2. Follow-Up Sales: As demand begins to build and people see lights working in their communities, SunnyMoney sells lights directly to teachers who sell them in their communities.
3. Dealer /sales agent Networks: Once there is enough demand and momentum, SunnyMoney works through dealers or sales agents to sell lights.